News & Press

U.S.
mortgage applications jumped last week as record low interest rates
spurred a surge in demand for home refinancing loans, data from an
industry group showed on Wednesday.

The
Mortgage Bankers Association said its seasonally adjusted index of
mortgage applications, which includes both purchase and refinance
loans, increased 32.2 percent to 1,159.4 for the week ended March 20.

Refinancing accounted for 78.5 percent of all applications.

Interest
rates on mortgages fell after the Federal Reserve last week said it
would buy Treasury securities for the first time in more than four
decades as well as more than double its planned purchases of
mortgage-related securities, according to Orawin Velz, associate vice
president of economic forecasting at the MBA in Washington.

"The
drop offered a sizable refinance incentive for most homeowners,
sparking a pick-up in refinance activity," she said in a statement.

Borrowing
costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63
percent, down 0.26 percentage point from the previous week, reaching a
record low, the MBA said.

It has been conducting the weekly survey since 1990.

AP

Interest rates were well below year-ago levels of 5.74 percent.

Leif
Thomsen, chief executive of Mortgage Master in Walpole, Massachusetts,
said his company is doing more business now than every before, with
just over $1 billion in total mortgage lending since the beginning of
the year, 85 percent of which has been in refinancing.

"The
housing market is coming back, but not roaring back," he said. "We have
gone from a crawl to a brisk walk and we will still have to navigate
some pitfalls before we are able to get running again."

The
Fed's purchases are part of its ongoing efforts to reduce mortgage
rates to stimulate borrowing and boost the U.S. housing market,
currently in the throes of the worst downturn since the Great
Depression.

However, so far, the low rates have had only a moderate impact on demand for loans to buy homes.

The
MBA's seasonally adjusted purchase index rose 4.2 percent to 267.8. The
index, however, was 33.7 percent below its year-ago level of 403.7.